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Fear or Fact, What Drives Your Trades & 3 Charts That Stand Out

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Posted by Tyler Bollhorn - StockScores

on Tuesday, 15 August 2017 06:46

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In this week's issue:

  • Weekly Commentary
  • Strategy of the Week
  • Stocks That Meet The Featured Strategy

In This Week's Issue:

- New Stockscores website coming soon
- Stockscores at the Toronto Money Show
- Stockscores' Market Minutes Video - Avoiding Fear and Recklessness
- Stockscores Trader Training - Fear or Fact, What Drives Your Trades?
- Stock Features of the Week - Abnormal Breaks US
-
New Stockscores website coming soon
The new Stockscores website will be launching soon. Once it is live, you will no longer be able to subscribe to use the Stockscores Market Scan unless you have completed one of our courses. If you are subscribed before we make the switch, you will be grandfathered until you cancel your subscription.

Stockscores at the Toronto Money Show
I will be doing two presentations at the Toronto Money Show in September, one free and the other a Master Class that you can purchase a discounted ticket to until August 17th. For more information on these two presentations, click here.

Stockscores Market Minutes - Avoiding Fear and Recklessness
Traders must avoid fear and recklessness to be profitable. This week, I discuss this, my weekly market analysis and the trade of the week on LC. Click Here to Watch
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel

Trader Training - Fear or Fact, What Drives Your Trades?
Speaking from experience, I have found that most mistakes in trading are the result of succumbing to fear. When I say mistakes, I don't mean losses since losing money on trades is part of trading. Instead, I mean those bad trades that we all take which don't fit in to our trading strategy and plan.

The fear based decisions that cause us to deviate from our trading rules can be broken down in to two types.

First, the trading decisions that we make because of our fear of losing money. These are usually exit trades; we sell too early for fear that our winner will turn in to a loser. Perhaps we fail to take a trade that fits our criteria because our "common sense" tells us there is something wrong with the trade and that it can't succeed. Maybe we enter a trade later than we should because we want to see the market prove our trading idea correct, only to end up getting in once much of the run has happened.

The second fear based trading mistakes we make are those that are the result of our fear of missing out. These tend to be on the entry; we take trades that don't quite fit our rules because we focus on what might be, the profits that could happen. It may be that we listen to an "expert" in the media or follow the actions of the crowd and do what the headlines are telling us to do.

Have you ever succumbed to either of these fear based trading mistakes?

If you are a normal human being, I think it is highly unlikely that you have not. Since they happen to all of us, we need to figure out a solution. Fortunately, the solution is quite simple.

Rather than focus on fear, focus on fact. Make trades based on what is happening, not what you think could happen.

Many have described fear as "future events appearing real". We don't walk down a dark alley at night because we might get mugged. We don't swim in the ocean because we might get attacked by a shark. We don't fly on a plane because it might crash.

When we focus on what might happen, what our fear tells us to do, we typically ignore probability. The probability of getting attacked by a shark is extremely low. Last year, you actually had a greater chance of dying taking a selfie photograph than by being attacked by a shark. If we focus on fact, we get better results.

This does not mean you should ignore fear. It is there to protect us and, when probability is on the side of the decision, it is best to listen to fear. I stopped flying small airplanes because the statistics showed that it was a dangerous thing to do. I still trade stocks because I have strategies that put the statistics in my favor.

When you trade, take your focus off of your emotion and look at the facts. Develop a trading strategy that puts probability for profit in your favor. Have a process in place to assess the facts and take the trades that meet your requirements. Overcome fear in favor of fact.

This week, I looked at the Abnormal Gainers US on Monday and checked the charts for breaks of downward trend lines after a rising bottom had formed. This is a good turnaround indicator, here are a few charts that stand out:

 

1. PNK
PNK tried to break its pull back last week but failed, it made the break today on good volume. Support at $18.93

Screen Shot 2017-08-15 at 6.42.45 AM

2. QRVO
QRVO breaks up from a rising bottom with average volume. Support at $64.70.

Screen Shot 2017-08-15 at 6.43.01 AM
3. INTU
INTU has been quiet for the past two months but broke higher from a rising bottom today. Support at $134.80

Screen Shot 2017-08-15 at 6.43.17 AM

References

  • Get the Stockscore on any of over 20,000 North American stocks.
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  • Scan the market using extensive filter criteria.
  • Build a portfolio of stocks and view a slide show of their charts.
  • See which sectors are leading the market, and their components.

    Disclaimer
    This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don't consider buying or selling any stock without conducting your own due diligence.


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